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U.S., China reluctant to help Europe bail out of debt crisis

November 3, 2011 | 10:19
am

REPORTING FROM CANNES, FRANCE -- The U.S. and China on Thursday announced their unwillingness to pour money into a European bailout fund, dealing a serious blow to its prospects of being the financial solution to Europe’s debt crisis.

After a morning of meetings on the perimeter of the Group of 20 summit, advisors to President Obama said the U.S. "has no plans" to step up its contribution to the International Monetary Fund, which could play a role in a bailout.

Shortly afterward, China's finance minister announced that Beijing wasn’t ready to commit to investing in an expanded European Financial Stability Facility, the official name of the bailout fund set up by countries that use the euro as their shared currency.

Analysts view the International Monetary Fund as a potentially critical player for expanding a rescue fund that could build help contain Europe’s debt woes. But a decision on that would need American backing, because the U.S. has veto power.

Meanwhile, the U.S. appears wary of the potentially increasing influence of China, particularly should Beijing agree to pile money into a bailout fund administered by the IMF. The U.S. has urged Europe to look at its own resources for a solution.

The ability of the U.S. "to contribute, to lead … is not tied necessarily to having the American taxpayer pay for every problem," said senior Obama advisor Michael Froman.

Photo: President Obama poses with French President Nicolas Sarkozy, center, and Chinese President Hu Jintao, among others, at the G-20 summit in Cannes, France. Credit: Lionel Bonaventure / AFP/Getty Images